Quant Funds Control One-Third Of Total Hedge Fund Assets

Quant funds, which apply mathematical formulas and computer models to arrive at a decision to buy or sell the securities, has captured almost one third of the total hedge fund assets, reports Reuters. The Hedge fund Industry is worth $2.3 trillion at present.

The data of Hedge Fund Research (HFR) says that more than nine in every $10 of net new assets invested are in these Quant funds in the previous year. The Quant funds have increased their share to 30 percent from about a quarter four years ago.

The majority of these Quant funds shocked everyone by posting 18 percent return on an average during the financial crisis of 2008, which took everyone by surprise, and made doubtful the capability of human traders to track the unpredictable events.

In total, the Quant funds assets have outperformed its peers by increasing at greater frequency almost by two thirds since 2009 compared to 40 percent increase for the industry.

According to HFR data, the investors invested more funds in the hedge fund approximately to the tune of $34.4 billion, which is more than they took out of funds. Quant funds share out of this was a whopping $33.1 billion.

The prime strategies on which the fund is based are credit long/short, credit relative value, and capital structure arbitrage. The recent bets of Saba include collateralized debt, but according to some it is a risky investment, though have higher yields and short term debt obligations.

Overall, for the first quarter of fiscal 2013, Hedge Funds gained 2 percent, which was comparatively less than the Global stock market returns. Funds like SAC Capital Advisor in Stamford and Jana Partners had a profitable last month, March.

The $15 billion firm, SAC Capital International gained 4.5 percent and 1 percent last month. The Jana Partners fund rose 6.1 percent in this year and 1.5 percent in March. The $22 billion fund started by Jim Simons, Renaissance Technologies, posted a 6.6 percent gain this year till March 15.

John Paulson, the hedge fund manager, reported profit in most of the funds he held in March. Passport Global fund, headed by John Burbank, was up 5.9 percent in 2013 and 2.3 percent in March.